difference between speculation in stocks and trading in stocks?

Forex trading or stock trading, speculation in stocks, trading in stocks and speculation in stocks are among the most popular concepts among traders around the world because they are an important source of income for them.

In this article, we will get to know the terms and know the difference between them.

Arrow definition
  • The stock is the smallest share a person can hold in any public joint stock company.
  • It represents a claim on a portion of the company’s assets and profits.
  • Whereas, the shareholder has the right to claim part of the company’s assets and profits.
  • In other words, the shareholder is the owner of the company, and its ownership is determined by the number of shares of the trader that he owns in relation to the rest of the number.
  • For example if the company has 1000 shares, and there is one person who owns about 100 shares, then this person is the owner and has the right to 10% of the company’s assets.
  • Shares are the basis of almost every portfolio.
  • Over the years, I have witnessed a remarkable advantage over most other investments in the long run.

Stock trading
  1. It is the process of buying and selling with a view to profit by selling the investor to the shares he owns after increasing the price.
  2. For example:
  3. A person owns 1,000 shares in a company, and the forecasts illustrate that this company’s share price will rise in the future.
  4. The investor holds it until its price rises and then sells it.
  5. Here the profit is the difference between the value of the stock at the time of sale and the original value of the stock.
  6. It is possible for the trader to buy back the shares of that company when they fall, to sell them when they rise.
  7. And he repeats this process many times.

Stock speculation
  • It is a process that allows a trader to bet on the rise and fall of the share price and then buy and sell the stock online.
  • When a trader expects the value of a stock to rise, he then buys and sells it when its value increases.
  • Here, the speculator wins the share price difference between the time the purchase is entered and the time to exit (when selling).
  • When the trader's expectations are wrong, the losses will be the difference between the value of the stock at the time of purchase and the value of the stock at the time of sale.
  • Here, the trader does not own the stock, so he is not entitled to receive a portion of the annual profits of the company that bought its shares for the purpose of speculation.
  • There are many speculative companies in stocks in the financial markets.

Forex trading
  1. It is worth noting that all shares are subject to the same conditions and criteria when speculating, and are subject to the same rules of technical and economic analysis.
  2. You cannot say that speculation in American stocks is better than Saudi Arabia, or vice versa.
  3. The preference of shares depends on the speculator himself and what he prefers.
  4. There are traders who prefer speculation in the short term.
  5. Here, investing in stocks that are highly volatile or fast to implement quick deals and exit from them with good profit.
  6. There are traders who prefer speculation in the long-term, and they buy the shares of startups that are expected to achieve great successes.
  7. Where these companies offer their shares at low prices, the trader buys the stock at the offering for the purpose of speculation and waits for the stock to rise and then sells the stock at a profit margin.

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